Here's How Stocks Perform During The 4th Year Of The Presidential Cycle

Citi's Tobias Levkovich thinks the S&P 500 is going to close 2012 at 1,375. He warns that "election outcome uncertainty may hamper stock price trends." But he also notes that stocks typically perform well during the fourth year of election cycles.

In the US, history argues for good news given that the presidential election cycle is often used as a guide and the fourth year (or election year) is often a respectable one for equities with the administration very focused on trying to stimulate economic growth (see Figure 1). However, as can be remembered vividly, this approach did not work at all in 2008.